SOLAR SHAKEUP

World Solar Industry Appears Headed for a Shakeout
Nathanial Gronewald, August 12, 2009 (NY Times)

"Despite a well-publicized oversupply of products and excess manufacturing capacity for solar photovoltaic equipment and components, some solar power industry watchers are still predicting further robust growth in production capacity. But financial analysts fear numerous makers may fail over the next few years.

"Record demand for solar equipment and a shortage of polysilicon, the key ingredient for PV panels, led companies worldwide to rapidly expand their facilities just before the global financial crisis…[Demand and] prices for polysilicon, PV and thin-film solar panels have plummeted…as weaker firms close or sell off major chunks of their operations to stay alive…[But despite] a glut of manufacturing capacity and unsold equipment, at least one research firm still sees capacity growing strongly and not slowing down or shrinking…[because of] government stimulus programs, the push for action on climate change and a bounce in demand responding to fallen prices."

click to enlarge

"…DisplaySearch, a division of the global market research firm NPD Group, predict[s] the worldwide manufacturing capacity for solar cells will expand by 56 percent this year over 2008 levels. 2009 is seen as one of the weakest market years this decade…[with] DisplaySearch admitting that demand is down by some 17 percent…[O]thers see a decline of up to 30 percent…[Because of the 2008 buildup of cell manufacturing capacity, DisplaySearch sees supply growing 56 percent this year, leading to] capacity expanding at a compound annual growth rate of about 49 percent a year up to 2013…

"[Navigant Consulting doubts capacity has expanded as much as company announcements suggest]…But all agree that the rapidly descending prices, fueled further by aggressive cost cutting by some of the industry's leading players, are causing a bit of upheaval in the solar technology field…Advent Solar, DayStar Technologies and Blue Square Energy as among the [U.S.] solar companies…[that] could be shaky…[S]tronger solar manufacturers are viewed as unlikely to acquire weaker rivals…[T]hat would only add to their own inventory problems…[L]arge technology companies not traditionally involved in solar power seem to be moving in…[A] major German auto parts builder recently swallowed up…Aleo Solar and ErSol Solar Energy."

click to enlarge

"First Solar Inc. has been given the title of largest cell manufacturer in the world…[with an estimated 1 gigawatt] production capacity…[and a $180 million Q2 2009 profit]…But Navigant's data show that last year, Q-Cells was the largest maker in terms of sales. That company is now hurting…[because of the global economic downturn and] the exit of Spain as a major destination for sales…And though Japan has long been the leading home of solar manufacturing capacity, China…[two years became] the world leader in solar production capabilities, although Japanese makers still have plans to rapidly grow output…Suntech is poised to emerge as the global leader…

"Thin-film solar technologies are also expected to expand [Suntech’s] market share…[T]hin film's share of the overall solar power industry [may] grow to 30 percent of cell capacity by 2013. Some experts predict that 2013 will see an explosion of solar power installations worldwide, while some see a strong rebound coming even sooner, even as early as 2010…But given the solar industry's relative youth and its history of wild up-and-down swings and adjustments, Navigant…warns against following too closely predictions on the future size and shape of the solar industry in the years to come. The feared "shakeout" in the industry could simply be a temporary return to less certain times…"